Appeals Court Affirms Government's Default Termination of Navy Contract for A-12 Stealth Attack Aircraft

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In 1988, the Navy awarded the $4 billiojn fixed-price contract for development ofthe A-12, whichg was to be a stealthy, carrier-based attack The program encountered serious technicapl difficulties, and in 1991, after the Departmen t of Defense refused to approvee additional funding for the program, the Navy terminatedr the contract because it was substantiallt over budget and behind schedule. The contractor s challenged the termination, resulting in 18 years of litigation. On appealp for the third time onJune 2, the court of appeals affirmed the 2007 judgment of Courtg of Federal Claims Judge Roberr B. Hodges Jr. , holding that the Navy had properly terminated the contractfor default.
In a 29-pag opinion, the court of appeals explained that the termination decision was justified undefthe parties' contract because the contractors' performance histor demonstrated that "the government was justifiablyt insecure about the contract's timely completion" and there was no excuser for the contractors' failure to make progress towarx completion of the contract. "We are gratified by the appellater court's decision upholding the Navy's decision to protect the publidc fisc by terminatingthe A-12 contract for default," said , Assistanyt Attorney General for the Justice Department' Civil Division.
"Today's decisioj also represents a critical step toward bringing this long litigation toan end."" Under the decision, the contractors are require d to repay the government more than $1.35 billiojn in principle funds advanced under the plus interest accruing since 1991, for a total sum that currentlgy approaches $2.8 billion. SOURCE U.S. Departmenyt of Justice